Trickle down: To ask higher income earners...??

[venusandmars]

Following on from the budget announcements today which disproportionately benefit higher earners (particularly anyone earning over £150,000 pa), if you have a higher income and will therefore benefit from the tax changes, how will this really impact on your spending?

Will you actually spend more on local services (more coffees out in a locally owned cafe)? Will you increase what you pay your window cleaner? Will you donate more to local charities or spend more time volunteering? Will you make voluntary contributions to HMRC? What WILL you do with the extra money?

OK, I know IABU asking people to account for their choices, none of us know the financial pressures that higher earners might be under, but it seems to me that the whole 'trickle down' economic theory is completely flawed. So little of that additional money is going to be seen by lower earners - and almost none to those who cannot work.

I'm not in the +£150K bracket but I have enough when I know others are really struggling. I have increased what I pay my window cleaner. Over the next 4 months I will use my 100% of my energy payment to donate to local foodbanks. It's small stuff, nothing heroic.

I am despairing about the tax announcements today.

@Skyellaskerry unfortunately my 'red wall' Tory MP has told me every time I've written to him that I'm wrong, my opinions, have no value and he trots out the party line.
I was told that the Rwanda policy has no issues, there was definitely nothing to be concerned about with regards to Boris Johnson and that child poverty was not an issue in our area (we are in the NE)
I know other people who have had the same experience. Fortunately there is a good chance he will lose his seat as he's a bit of a non entity.

This is the reality & what they want- less class mobility.

I was studying a highly prestigious course as a mature student at Oxbridge, had done all the access to get to that point, budgeted to manage the years of study, then cost of living crisis hit following pandemic. I’ve now dropped out and am doing an admin job. I’m quite capable of being a specialist in my chosen field. Supervisors agreed. And now that is lost, because I can’t afford it. Plenty of people encouraged me to stay but I was getting £80 top UC as they deduct more for education grants versus employed income. There’s no use trying to complete a degree while homeless and starving. I now get £750 top up, on the same income. But my skills are lost.

Just started work with our local climate change action group. If we can persuade people to donate some of their tax savings, we’ll insulate local people’s houses. Double whammy - less heating cost and less CO2. Fingers crossed!

We aren't in the highest tax bracket but will be better off. None of that extra money will be trickling down from us. It will be invested. If we were to splash out it would be on another holiday and we often go to China or Japan.

Hi, we've probably crossed paths or move in similar spheres. Also seeing first hand the chronic shortage of software developers, analysts and QA. QA will take juniors with soloist no experience at all, just an interest. Software devs are getting roles after three month bootcamps. I'm a dev myself and I have volunteered at organisations that get people retrained in three months and straight into roles.

But while skilled teachers, paramedics and managers are keen to retrain and try something new, it's still baffling how few from, say, very poorly paid work, and sporadic work, want to retrain at all. Even offering free sessions, they would come along but were reluctant to even try to learn and seemed to attend purely to convince themselves it was impossible. It made me very jaded. There are even free scholarships for the courses. Free!

Exactly, I mean, mine's going on my house or travel. It won't be trickling anywhere.

With the tax cut we'll be around £15k better off a year. Which I think is wrong on so many levels.

We already buy everything we want. In the grand scheme of things we aren't big spenders; single car which is 10 years old, don't have expensive holidays, and tend to buy second hand.

We will save/invest the extra money. So it won't go directly back into the economy.

Also, the way we're viewing it is this will be a temporary cut until Labour get it at the next election. Then we'll end up with a 50% or higher rate.

@wonkylegs My Tory MP seems at least to be able to respond more personally, even if I still disagree with the answers! Still think everyone with a view should email their MPs as there's surely strength in volume of correspondence and being silent isn't going to achieve anything at all.

hmmm …. it’s like the government is trolling us and wants to incite civil unrest. It’s otherwise illogical and suicidal politically.

Are they doing this on purpose to increase their powers? They’ve already made huge changes to reduce the right to protest.

I never believe in conspiracy theories but this is non-sensical. They went to Oxford and are not stupid. They know what they are doing.

Exactly this and actually, the lack of engagement in politics is more disheartening than disagreeing.

Can you give some details about this, what does the work involve, do you have links for the courses?

I am from Singapore. Do you know why kids can succeed in Singapore? they mostly tend to have stable home lives, even if they are poor. When you have a stable home and loving parents, thats half the battle won. You will generally grow up to be want to be productive.

a big factor is Government housing. Every child (rich or poor) almost certainly is born into a home owning family. 85% of the population lives in flats that are built by the government and sold to the citizens at a subsidized rate. Hence 89% home ownership. Even if you are from a poor family, your parents would still have been able to afford to buy a modest 2 or 3 bed flat that is within walking distance to schools, playgrounds, shopping centre, metro station, doctors etc. So no chance of a family ending up in premier inn if the landlord decides to sell their home. The government would make sure every housing estate has these facilities. Most singaporeans do not own cars but it is easy to get around and the public transport is very affordable. You get a discount on your flat if you live near your parents and this means that grandparents often play a huge part in taking care of children (and there is also quite hefty childcare subsidies for those who don't have grandparents); this means that most women work post DC. Dual income households who don't need to pay for petrol and who own subsidized stable housing can afford to invest in their children. 90% of singaporean children have private tuition. When I was growing up, I knew people who worked as petrol station attendants and their children would have tutors (but i bet they would not be able to afford it in the UK). When I was a kid, i had an education account that was set up for me by the government and i had a few hundred dollars to spend on school trips or enrichment activities of my choice. It was compulsory to have an extra curricular activity and the school often paid for you to learn additional skills.

Its a very very different set up but I can tell you that it is not trickle down economics, its the state investing in its most valuable asset- its children and its people. There is also precedent that even if someone is bankrupt and does not pay the mortgage, the housing board would not evict someone from their government flat and the reason is sanctity of family life. I had an aunt whose mortgage on her government flat was partially forgiven as her husband passed away early (and so she was able to continue paying for her son's university fees even after being made redundant). The singapore government might have some right wing style policies like no job seekers allowance and low personal taxes etc and no theoretical welfare state, but that does not mean it does not invest in its people. Its a different way of doing things, but honestly in the UK, there isn't the infrastructure to replicate this. So in my view, we should stick to the welfare state.

That means that you are already on £360,000 a year (based on a single person- more if you are 2 earners- about £470,000 or £235,000 each )

Unclear why you cant you afford cars and holidays at the moment?

@onthefencesitter thanks for your post, very interesting.

Not everyone wants to spend big on cars & holidays…

The implication was that they couldn't afford too- on an income of a minimum of £360,000 pre tax

Just because people CAN buy things it doesn’t mean they do.
Our cars are 11 and 7 years old, we will buy new ones when these fail their MOTs or break so much it’s not worth repairing them. We could buy new cars but don’t

I'm not savvy in economics so please correct my theory if it's wrong, but if the vast majority of British people ean £35k or less, why are they not getting the tax cuts? If they raised the threshold to say, £20k or more, then those people have more money to cope with bills etc and maybe have a tiny bit left over to save. If most people have more money at the lower end of earnings (either by tax cuts or minimum wage rises) then surely many more other people in the wider economy benefit? Or am I naïve?

My Tory mp is quite decent - I sometimes wonder if she is in the correct political party. She seems far too reasonable to be a Tory.

@LimitIsUp yes, I wonder how many will become rebels when it comes to voting on these plans!

@UsernameHistories

Your calculations are spot on. But I didn't say we couldn't afford them, I said we didn't want them.

We don't need a new car. Our last car lasted us 12 years, hopefully this car will last the same.

Holiday wise, we used to spend around £5-10k a year on holidays. But now we have a baby and a toddler it's not worth spending that sort of money.

I am a higher earner. Not quite in 45% bracket. I reckon the budget will save me just over £3k a year. BUT our nursery bill has gone up about £100 a month, so that's £1200 gone. Food prices, bills, holiday costs, everything more expensive, so that's easily absorbed the remaining £1800, probably more. I'm basically in the same place I was, pre- rampant inflation, but still not thinking of splashing out because, erm, there's more inflationary madness to come (particularly with house prices now!). Luckily we have a fixed rate on energy but if we didn't the cuts today wouldn't even neutralise the higher costs this year.

Liz Truss must be a moron to think the average person is so stupid.

For the avoidance of doubt, I am fine with paying income tax; I never vote Tory and would not vote for tax cuts even if they personally benefit me. I am less fine with paying it to a Tory government though!

The said they buy what they want

it suggested to me that they didnt want cars and holidays

(i do…i want holidays)

OH pays a massive amount of tax but is generally tight with money he did buy Jaguar IPace electric but only because he gets a big tax allowance. I’m very thrifty too you should see the yellow lables in my cupboard, we both cook well so only go out to eat maybe once a month.
He will benefit quite a lot from the tax cuts but it’s not likely to change our spending

@Noviembre & @BasicDad this is something I'm going to look into right now!!